EU pushes for pan-European financial integration but member states go cold on plan

European governments must push harder for merging among eurozone countries in order to protect the financial system from collapse, the European Commission said. The EU finance arm pointed to a bank deposit guarantee scheme which has so far failed to get off the ground as an area where integration needs to be improved. The call comes as European Union finance ministers are to meet in Luxembourg on Thursday and Friday, where officials said talks were likely to be very long and difficult. During the meeting, ministers will thrash out outstanding deeper integration ideas and the eurozone budget.

The finance chiefs will also push forward plans for an EU capital markets union.

The results are to be debated at an EU summit of leaders later this month on June 20 and 21.

Even though a year has passed since EU leaders instructed finance ministers to reach deals on the various strands of deeper economic integration, none have been agreed in full.

European Commission Vice President Valdis Dombrovskis told a news conference: “Willingness to act has waned as the economy has improved.

Willingness to act has waned as the economy has improved

Valdis Dombrovskis

“There is a saying that the European Union has been built through crisis. But it does not have to be so.”

Eurozone governments are still trying to work out a future budget for the 19 countries sharing the euro.

Arguments range from how this should be financed and what size it a budget might be.

France wants a substantial budget funded from dedicated taxes such as on financial transactions, digital companies or plastic, and used to stabilise the eurozone in a crisis.

While the Netherlands and other northern European countries, including Germany, are keen for a small spending pot linked to the existing EU budget.

Senior eurozone officials said the compromise was likely to envisage a development of the budget over time.

One senior official said: “It will not be the big bazooka, it will start small and grow large.”

Berlin claims if it is introduced now, it could mean German savers bailing out Italian depositors over a banking crisis there.

Germany and its allies have insisted that eurozone banks, especially in Italy, Greece and Portugal, should first have to cut legacy risks still on their books after the sovereign debt crisis of 2010 to 2015.